FxWirePro: Sell copper at correction targeting $2.15 per pound

After a remarkable performance in November, the copper rally faded in December. Copper rose from $2.23 per pound on the first of November to $2.75 per pound on 28th; but after this rally the copper declined as the stronger US dollar started taking its toll. In addition to that, the recent turmoil in China’s bond market, where yields are grinding higher, is also playing its part in the decline of the red metal’s price.

We, at FxWirePro, have been a copper bear for quite some time now. Though our stop loss for the short call was taken out $2.3 per pound, we refrained from going long in the copper. We expected and still do that a debt debacle in China would severely hurt the copper price and would force the red metal well below $2 per pound. That scenario hasn’t played out yet, but rising interest rates in China amid a very high debt has certainly raised that possibility.

We recommend going short in copper at the current price of $2.5 per pound and at rallies up to 42.65 per pound targeting $2.15 per pound. However, as of now, the bulls are quite active in copper and they would try to defend levels like $2.3 per pound.